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mostlysignssomeportents · 9 months

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Private equity ghouls have a new way to steal from their investors

Private equity is quite a racket. PE managers pile up other peoples’ money — pension funds, plutes, other pools of money — and then “invest” it (buying businesses, loading them with debt, cutting wages, lowering quality and setting traps for customers). For this, they get an annual fee — 2% — of the money they manage, and a bonus for any profits they make.

On top of this, private equity bosses get to use the carried interest tax loophole, a scam that lets them treat this ordinary income as a capital gain, so they can pay half the taxes that a working stiff would pay on a regular salary. If you don’t know much about carried interest, you might think it has to do with “interest” on a loan or a deposit, but it’s way weirder. “Carried interest” is a tax regime designed for 16th century sea captains and their “interest” in the cargo they “carried”:

https://pluralistic.net/2021/04/29/writers-must-be-paid/#carried-interest

Private equity is a cancer. Its profits come from buying productive firms, loading them with debt, abusing their suppliers, workers and customers, and driving them into ground, stiffing all of them — and the company’s creditors. The mafia have a name for this. They call it a “bust out”:

https://pluralistic.net/2023/06/02/plunderers/#farben

Private equity destroyed Toys R Us, Sears, Bed, Bath and Beyond, and many more companies beloved of Main Street, bled dry for Wall Street:

https://prospect.org/culture/books/2023-06-02-days-of-plunder-morgenson-rosner-ballou-review/

And they’re coming for more. PE funds are “rolling up” thousands of Boomer-owned business as their owners retire. There’s a good chance that every funeral home, pet groomer and urgent care clinic within an hour’s drive of you is owned by a single PE firm. There’s 2.9m more Boomer-owned businesses going up for sale in the coming years, with 32m employees, and PE is set to buy ’em all:

https://pluralistic.net/2022/12/16/schumpeterian-terrorism/#deliberately-broken

PE funds get their money from “institutional investors.” It shouldn’t surprise you to learn they treat their investors no better than their creditors, nor the customers, employees or suppliers of the businesses they buy.

Pension funds, in particular, are the perennial suckers at the poker table. My parent’s pension fund, the Ontario Teachers’ Fund, are every grifter’s favorite patsy, losing $90m to Sam Bankman-Fried’s cryptocurrency scam:

https://www.otpp.com/en-ca/about-us/news-and-insights/2022/ontario-teachers--statement-on-ftx/

Pension funds are neck-deep in private equity, paying steep fees for shitty returns. Imagine knowing that the reason you can’t afford your apartment anymore is your pension fund gambled with the private equity firm that bought your building and jacked up the rent — and still lost money:

https://pluralistic.net/2020/02/25/pluralistic-your-daily-link-dose-25-feb-2020/

But there’s no depth too low for PE looters to sink to. They’ve found an exciting new way to steal from their investors, a scam called a “continuation fund.” Writing in his latest newsletter, the great Matt Levine breaks it down:

https://news.bloomberglaw.com/mergers-and-acquisitions/matt-levines-money-stuff-buyout-funds-buy-from-themselves

Here’s the deal: say you’re a PE guy who’s raised a $1b fund. That entitles you to a 2% annual “carry” on the fund: $20,000,000/year. But you’ve managed to buy and asset strip so many productive businesses that it’s now worth $5b. Your carry doesn’t go up fivefold. You could sell the company and collect your 20% commission — $800m — but you stop collecting that annual carry.

But what if you do both? Here’s how: you create a “continuation fund” — a fund that buys your old fund’s portfolio. Now you’ve got $5b under management and your carry quintuples, to $100m/year. Levine dryly notes that the FT calls this “a controversial type of transaction”:

https://www.ft.com/content/11549c33-b97d-468b-8990-e6fd64294f85

These deals “look like a pyramid scheme” — one fund flips its assets to another fund, with the same manager running both funds. It’s a way to make the pie bigger, but to decrease the share (in both real and proportional terms) going to the pension funds and other institutional investors who backed the fund.

A PE boss is supposed to be a fiduciary, with a legal requirement to do what’s best for their investors. But when the same PE manager is the buyer and the seller, and when the sale takes place without inviting any outside bidders, how can they possibly resolve their conflict of interest?

They can’t: 42% of continuation fund deals involve a sale at a value lower than the one that the PE fund told their investors the assets were worth. Now, this may sound weird — if a PE boss wants to set a high initial value for their fund in order to maximize their carry, why would they sell its assets to the new fund at a discount?

Here’s Levine’s theory: if you’re a PE guy going back to your investors for money to put in a new fund, you’re more likely to succeed if you can show that their getting a bargain. So you raise $1b, build it up to $5b, and then tell your investors they can buy the new fund for only $3b. Sure, they can get out — and lose big. Or they can take the deal, get the new fund at a 40% discount — and the PE boss gets $60m/year for the next ten years, instead of the $20m they were getting before the continuation fund deal.

PE is devouring the productive economy and making the world’s richest people even richer. The one bright light? The FTC and DoJ Antitrust Division just published new merger guidelines that would make the PE acquire/debt-load/asset-strip model illegal:

https://www.ftc.gov/news-events/news/press-releases/2023/07/ftc-doj-seek-comment-draft-merger-guidelines

The bad news is that some sneaky fuck just slipped a 20% FTC budget cut — $50m/year — into the new appropriations bill:

https://twitter.com/matthewstoller/status/1681830706488438785

They’re scared, and they’re fighting dirty.

I’m at San Diego Comic-Con!

Today (Jul 20) 16h: Signing, Tor Books booth #2802 (free advance copies of The Lost Cause — Nov 2023 — to the first 50 people!)

Tomorrow (Jul 21):

1030h: Wish They All Could be CA MCs, room 24ABC (panel)

12h: Signing, AA09

Sat, Jul 22 15h: The Worlds We Return To, room 23ABC (panel)

If you’d like an essay-formatted version of this post to read or share, here’s a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:

https://pluralistic.net/2023/07/20/continuation-fraud/#buyout-groups

[Image ID: An old Punch editorial cartoon depicting a bank-robber sticking up a group of businesspeople and workers. He wears a bandanna emblazoned with dollar-signs and a top-hat.]

#pluralistic #buyout groups #continuation fraud #pe #pyramid schemes #the sucker at the table #pension plans #continuation funds #matt levine #fiduciaries #finance #private equity #mark to market #ripoffs

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castielsprostate · 3 months

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hey americans, please fucking vote this year! thanks!

signed,

the rest of the world

#if you do not fucking vote we will ALL FUCKING DIE #like i am NOT kidding!!!!!!!!!!!!!!!!!!! we will fucking die #i don't care if you don't agree with biden shut the fuck up and keep that orange clown piece of shit out of office #ukraine will fall. isreal will be funded to continue the genocide.#like are you fucking serious? genocide joe against trump's rain of terror? if you do not vote blue you will not have fucking rights lmao #he will try to change the constitution “oh it won't actually go through”. are you fucking insane???? ARE YOU ACTUALLY INSANE?????#unfortunately your stupid fucking president has the power to destroy everything. we ALL don't want that but! unfortunately! it's true!#so shut the fuck up and fucking vote blue or choose to fucking die #this goes so much further than the vapid americans think. this impacts literally all of us. ALL. OF. US.#*reign #like y'all actually think not voting will help.. anything? except give power to the already alt right govts?#this is literally what they want

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iirulancorrino · 1 month

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The Green brothers are doing effective altruism better than maybe 95% of people who identify online as effective altruists.

#I know it's cringe to be into vlogbrothers in 2024 but I'm incredibly impressed by JG's swerve into fighting global health inequities #and last week's news about their commitment to funding TB prevention was really cool #also I have a lot of respect for creators who seem able to continue to build online communities focused around optimism and trying #to do good in the world in a way that seems genuine--because I've realized how much intentional effort that must take #when social media writ large seems to skew towards either reactionaries or doom and gloom #VB was formed in an era where everyone had a lot more earnest hope in the potential of the internet and (with multiple evolutions)#they've kept going through a seismic change in the way we relate to social media and the creator economy. it's interesting #also I think it's interesting JG is doing his best work 10+ years out from his peak fame. life lesson there maybe

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montanabohemian · 7 months

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WGA GOT A (tentative) DEAL

AND NOW WE KEEP FIGHTING TO GET SAG-AFTRA THEIR DEAL

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jeweled-blue-eyes · 5 months

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Misery AU where Yoichi is the author of the Captain Hero comics and AFO throws him into the vault when he discovers that Yoichi is planning to kill off the Demon Lord

#yoichi wrote the comic to make the public more sympathic towards metahumans #but it has the opposite effect AFO has found a way to use it as inspiration for evil regardless #when Yoichi continues to refuse to rewrite the story AFO just starts uploading his fanfiction under Yoichi's pen name #his fans grow more and more concerned by the villain apologism and assume that the real author has died and was replaced with a ghostwriter #second is a diehard fan who believes in the conspiration theory that the real author is being held hostage #and forced to change the story at gunpoint #they break into Yoichi's mansion #yoichi shigaraki #afo #concepts #my hero academia #afo funded his villain career with yoichi's money

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petewentzisblack1312 · 10 months

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something people arent really mentioning about the we didnt start the fire cover is that as part of it fall out boy are giving away a trip and vip backstage tickets to their boston show, and to enter you have to sign a petition asking for support of the lgbt community or donate to one of three organisations, including the bands charity fund, the human rights campaign and everytown for gun safety. so i dont think its that bad.

enter here

#dils declares #fall out boy #patrick stump #pete wentz #joe trohman #andy hurley #personally i would not donate to the bands charity fund because i dont know what they do with that money exactly.#but those are some options #also i dont think the petition is that great its just asking bud lights parent company to continue supporting the lgbt community #which is like. ok.

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neotaissong · 2 months

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Dahomey (2024) dir. Mati Diop

Mati Diop (Atlantics) just won the Golden Bear at Berlin and shouted “I stand with Palestine!” as she accepted her award. Her film deals with the returning of plundered royal treasures from the African Kingdom of Dahomey from Paris to the present day Republic of Benin.

#undeniable #neotai's song #mati diop #master teacher #free gaza #free palestine #Palestine #dahomey #cinema #German arts scene revealed itself to be deeply anti Palestinian and even more racist and Islamophobic than previously thought #cutting funding for anyone who dares to speak out about palestine so this was a great venue for Palestine to be mentioned within...#Germany standing on the wrong side of history…again and again...but german activists outchea raising hell...#you saw how they turned hilary clinton's cinema for peace (the AUDACITYYYYY) event upside down #MUCH RESPECT TO THOSE ACTIVISTS #and to mati showing out #look forward to seeing the movie as atlantics was dope and needs a rewatch tbh #the 'after atlantics' marketing is dope cos black artists are so often cut off from their own continuity and context by the establishment #movies

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starshineyellow · 6 months

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Hey Americans, it’s fall 2023 and the adult Covid vaccines are STILL FREE at certain pharmacies. Even if you have no health insurance. Even if you have health insurance but the insurance company likes to whine about CVS being “out of network” for vaccinations.

Find out more FAQ stuff from the CDC here:

And find your local locations with free vaccines below. Once you’ve put in your zip code and hit “go”, on the next page, make sure to click the checkbox that says “BRIDGE Access Participant” so you know these locations have the free shots.

#text post #Covid #covid19 #covid 19 #covid vaccine #covid pandemic #pandemic #vaccine #signal boost #boost #please boost #vaccination #covid-19 #I am just putting as many tags that I can think of on this post to help it get to people #because I was unaware that the government was continuing to fund free vaccines #because the national health emergency ended in May #so finding out I could still get it for free even if my insurance wanted to be annoying was a relief #and I want to make sure others know it too

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kathanglangit · 7 months

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Gubat Banwa is FULLY FUNDED!

In less than A DAY, we've hit our goal of $40,000! Thank you all so much! Your continued support made this massive achievement for SEA representation in TTRPGs possible. 🔥🔥

Revel in glory, Kadungganan! This victory belongs to us all!

The campaign will continue to run for the next 29 days. There are a few stretch goals still waiting up ahead, so if any of these catch your interest, do continue to spread the word about the project.

The Gubat Banwa Kickstarter was fully funded in 1 day! (But we've still got some neat surprises in the stretch goals...) Check them out here:

We cannot overstate how deeply we appreciate your support, it truly means the world to this small team from the Philippines. Now, let us see this campaign through to the end of the far horizons, shields abreast and blades gleaming and heads held high with pride.

Until glory!

#gubat banwa #ttrpg #indie ttrpg #tabletop rpgs #rpg #southeast asia #southeastasia #dnd #kickstarter #philippine blade #weapon design #philippine history #philippine culture #filipino artists #fantasy #fantasy worldbuilding #fully funded #thank you for your continued support!

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nano30cm · 3 months

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i'm so normal about these three (i'm not)

#reprise reprise #td brick #td eva #td jo #total drama fanart #dont ask me about how down bad i am for jock. i might answer #eva and jo own a gym together but eva does all the spokewoman and publicity work bc shes inexplicably popular #its a whole thing though #i decided jos full first name is jolene because shes perfect and beautiful and i love her #jolene handles staffing at their main location and scouts for branch locations #their gym is really popular with women and lesbians which is fun because in all my wisdom ive made neither of these women lesbians #brick joined the army to help fund his continued fashion designer career

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night-triumphantt · 4 months

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I want to go into the new year with a ceasefire, I want aid to reach Gaza, more than just what is needed, I want excess aid, more than they’d know what to do with, I want them to get help rebuilding, I want Palestinians to be safe and free.

#free Palestine #happy new year #I don’t know how to watch and just #… feel entirely unimpactful as people continue to die and our ‘leaders’ find it #fund it*#aid in it #I feel like I’m going insane walking around and seeing people act normal #watching as the journalists lose hope and grow resentful and bitter and I can’t blame them #how many of us see and yet nothing has changed for them #they continue to have no food and no water and continue to lose people and friends

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iz-bee · 2 years

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hi again. my grandpa has now passed away and we still need funds for his remaining medical bills as well as for his funeral. please please please d0nate and reblog this post, we need as many donations as we can get

#jumblr #emergency crowdfunding #mutual aid #mutual aid request #mutual aid fund #crowdfunding #pls continue to spread / donate #gofundme #iz talks

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panic-flavored · 4 months

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Update on my kitty!

A few weeks ago, I was posting up a storm about my kitty Scaramouche and his need for life-saving surgery. I've been updating the GoFundMe (FULL story over there!) but I haven't updated in a while over here on Tumblr, so I'm here to do that!

Scaramouche had chest surgery about 3 weeks ago at Kansas State University, and now he's back home and recovering great! Although none of the vets or surgeons that worked on his case can tell us what happened to him (or may still be happening,) he's extremely happy to be home and appears to be doing well!

It's been an extremely stressful and emotional three months, but Scaramouche has a chance to live now because of all the support we received from everyone! Getting him into Kansas State University would have been so much more difficult without the donations. Thank you to everyone who donated and shared the GoFundMe to spread the word! We're going to continue doing everything we can for him.

Donations are still extremely appreciated! We've been financially wiped out after all the vet/hospital bills, and we still have a lot of bills to pay as well as follow-up appointments, x-rays and whatever else he might need. If GoFundMe isn't your cup of tea, I have an Etsy stop as well as a Ko-Fi you can support!

Thank you again to everyone who has donated so far, and to everyone who has shared the page and spread the word! I can't express in words how much my little guy means to me, and how grateful I am to everyone who helped us save his life. Have a great new year! <3

#gofundme #go fund me #fundraiser #cats #cat #ty again to everyone who supported <3 #it means the world to me #I'm still nervous about his future health but for now we know we've done everything we can for him #we can only hope now that he continues to get better and better!

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nerdie-faerie · 4 months

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People will be like 'oh you go to uni, you must be smart!' mate, I've never met people with less common sense than uni students. Though what else would you expect when you stick a load of sleep deprived, overwhelmed, young adults together

#Uni shenanigans #yeah sure i can write you an essay no problem will it make an grammatical sense? no.#is that because i wrote it in the early hours of the morning the day of the dealine? absolutely.#do i understand the necessity of a balanced diet and throwing away out of date food? yes.#does the majority of the student populace ignore this? also yes but thats to be expected when poor budgeting leads to low grocery funds #listen am i well aware of the importance of proper time management? of course i am #and yet i continue to make the dumbest decisions imaginable causing myself unbearable levels of stress #because i am an adult child left alone to my own devices and #school prepared me real well for taking exams but not for taking care of myself in a way that isnt at least a lil self destructive #wouldnt believe the kinds of things i deem optional when i have a task to do cus putting myself last has been hammered into me my whole life

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lobotomyladylives · 4 months

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not trying to get involved in voting/abstaining from voting disk horse as I really don't know what the fuck I'm gonna do but it's wild that anyone is surprised that so many ppl are tapping out on the presidential election when our choices are: the pedophilic dementia patient now known as genocide joe, or the wildly unpredictable racist rapist narcissistic nationalist billionaire. HOW are these our only choices. it's such a fucking outrage & whoever wins I hope someone pulls on oswald

#like. ok yes bidens domestic policies will be less harmful than trumps. but he is quite literally funding a literal genocide rn #& if ppl hold their nose to vote for him anyways the dems will continue to think they can throw the worst candidates possible & still rely #on their voter base to just go for ''the lesser of two evils.'' like at a certain point when do we just start shooting them #i know i sound like one of those firebomb a walmart ppl who do not in fact go out & firebomb a walmart but GOD #my post

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arlo-venn · 3 months

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Hiya friends. Me again. I need some help acquiring the funds for a bunch of things all at once (😫), if anybody's got anything at all to spare... 💞 Here's a list that I'm not entirely sure is complete: deodorant - $10 neosporin - $11 toothpaste - $13 gloves - $17 dog food (!!) - $38 cat food - $37 medication - $40

Venmo: @remywolfe CashApp: $remywolfe PayPal: [email protected] or paypal.me/wolfstephollow ApplePay: 4805199559 kofi: ko-fi.com/remywolfe

#i also need weed (medicinally) but i feel weird asking for help with that #Th confessed to Ty that they are in $4000 worth of debt that she's been hiding............ is why I cannot ask either of them to help #because let's be real that probably wouldn't have happened if Ty wasn't funding my survival on top of her own #sorry sorry always and ty ty for reblogs n donations #i would also love to buy tyrell a new iron as hers broke yesterday about which she is very sad #and i feel it may be a good offering as thanks for continued support/sorry for the expense of my existence #but that also feels like something i should not ask for help with here

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